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The Impact of Immigration on Competing Natives' Wages: Evidence from German Reunification

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  • Susanne Prantl

    (University of Cologne)

  • Alexandra Spitz-Oener

    (Humboldt-University Berlin, IAB, IZA)

Abstract

After the fall of the Berlin Wall on November 9, 1989, and the collapse of the German Democratic Republic, a sudden, unexpected, and massive influx of East German migrants hit the entire West German labor market. The context is well suited for investigating whether immigration influences natives' wages and how the effects depend on product and labor market conditions. We propose direct measures of potential migration with exogenous variation, compare migrants to natives with similar capabilities, and segment the labor market along predetermined margins. We find that immigration can have negative effects on the wages of natives. These effects surface when product and labor markets are competitive but not under regulations that restrict the entry of firms and provide workers with a strong influence on firms' decision making.

Suggested Citation

  • Susanne Prantl & Alexandra Spitz-Oener, 2020. "The Impact of Immigration on Competing Natives' Wages: Evidence from German Reunification," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 79-97, March.
    • Handle: RePEc:tpr:restat:v:102:y:2020:i:1:p:79-97
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    5. Ali Sina Önder & Sascha Schweitzer & Olga Tcaci, 2024. "Innovation and Regional Development: The Impact of Patenting on Labor Market Outcomes," Working Papers in Economics & Finance 2024-07, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
    6. Glitz, Albrecht & Wissmann, Daniel, 2021. "Skill Premiums and the Supply of Young Workers in Germany," Labour Economics, Elsevier, vol. 72(C).
    7. Lembcke, Franziska & Nöh, Lukas & Schwarz, Milena, 2021. "Anreizwirkungen des deutschen Steuer- und Transfersystems auf das Erwerbsangebot von Zweitverdienenden," Working Papers 06/2021, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    8. Alessia Lo Turco & Daniela Maggioni & Federico Trionfetti, 2024. "Immigration and the skill premium," Working Papers hal-04556685, HAL.
    9. Black, Sandra E. & Liepmann, Hannah & Remigereau, Camille & Spitz-Oener, Alexandra, 2022. "Government aid and child refugees’ economic success later in life: Evidence from post-WWII GDR refugees," Labour Economics, Elsevier, vol. 75(C).

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